Bitcoin Cycle Timing Model (BTC Market Heat Scoring System)

This skill helps you systematically assess where Bitcoin sits in its market cycle — from extreme fear (accumulation opportunity) to extreme greed (distribution/exit signal). Through a weighted evaluation of 13 on-chain, sentiment, and market indicators, it produces a 0-100 Market Heat Score and actionable buy/sell recommendations.

Use Cases

Use this skill when users ask the following types of questions:

• Has Bitcoin bottomed out / Can I buy the dip
• Is Bitcoin overheated / Should I take profits
• Where is BTC in the current cycle
• Do on-chain data support building or reducing a position
• What are long-term holders doing / Are ETFs buying or selling
• Is leverage too high / Is the market too greedy

Scoring System Overview

The model uses a weighted composite score from 0 to 100:

• 0 = Extreme Fear (historically the best buying opportunities)
• 100 = Extreme Greed (historically the best selling opportunities)

Indicators are split into two groups:

The heavier weighting on weekly/structural indicators reflects their superior track record in identifying cycle extremes.

Daily Pulse Indicators (32 points total)

For each indicator, use web_search to find the latest data, then score according to the normalization rules below. Each indicator's raw value is normalized to a 0-100 sub-score, then multiplied by its weight to get its contribution to the total.

D1: Bitcoin ETF Daily Net Flow (Weight: 12 points)

What it is: The net amount of money flowing into or out of spot Bitcoin ETFs (like BlackRock's IBIT, Fidelity's FBTC) each day. Large inflows = institutional buying pressure; large outflows = institutional selling pressure. This became one of the most important demand indicators after spot BTC ETFs launched in January 2024.

Search keywords: Bitcoin ETF daily net flow or BTC spot ETF inflow outflow today

Scoring:

• Net outflow ≥ $500M → Sub-score 0 (Extreme fear / institutional panic selling)
• Net flow ~$0 → Sub-score 50 (Neutral)
• Net inflow ≥ $1B → Sub-score 100 (Extreme greed / FOMO buying)
• Linear interpolation between these anchors

Interpretation: Sustained large ETF inflows often indicate late-stage institutional FOMO near tops. Conversely, persistent outflows or the absence of inflows during price drops can signal capitulation bottoms.

D2: Funding Rate (Weight: 8 points)

What it is: In perpetual futures markets, the funding rate is a periodic payment between long and short traders. Positive = longs pay shorts (bullish bias), negative = shorts pay longs (bearish bias). It directly reflects leverage sentiment in the derivatives market.

Search keywords: Bitcoin funding rate or BTC perpetual funding rate

Scoring:

• Funding rate ≤ -0.05% → Sub-score 0 (Extreme bearishness in derivatives)
• Funding rate ~0.01% → Sub-score 50 (Neutral)
• Funding rate ≥ 0.10% → Sub-score 100 (Extreme bullish leverage)
• Linear interpolation between these anchors

Interpretation: Persistently high funding rates (>0.05%) mean longs are paying a premium to maintain positions — a crowded trade vulnerable to liquidation cascades. Deeply negative funding rates indicate short dominance, often seen near bottoms.

D3: Fear & Greed Index (Weight: 7 points)

What it is: A composite sentiment index (0-100) aggregating market volatility, volume, social media sentiment, surveys, Bitcoin dominance, and Google Trends. Published daily by Alternative.me. 0 = Extreme Fear, 100 = Extreme Greed.

Search keywords: crypto fear and greed index or Bitcoin fear greed index today

Scoring: Direct passthrough (the index itself is already on a 0-100 scale matching our framework).

Interpretation: When fear is extreme (<15), the crowd is capitulating — historically the best buying windows. When greed is extreme (>80), euphoria dominates — historically precedes significant corrections.

D4: Long/Short Ratio (Weight: 5 points)

What it is: The ratio of long to short positions on major exchanges (Binance, OKX, etc.). A ratio of 1.0 = equal longs and shorts. Above 1.0 = more longs. This shows real-time positioning of active traders.

Search keywords: Bitcoin long short ratio or BTC long short ratio Binance

Scoring:

• Ratio ≤ 0.8 → Sub-score 0 (Heavy short positioning)
• Ratio ~1.0 → Sub-score 40 (Slight long bias is normal)
• Ratio ~1.5 → Sub-score 70 (Crowded long)
• Ratio ≥ 2.0 → Sub-score 100 (Extreme long crowding)

Interpretation: Extremely high long/short ratios indicate one-sided positioning vulnerable to a squeeze. Very low ratios (shorts dominating) can signal a potential short squeeze and reversal upward.

Weekly Structure Indicators (68 points total)

These on-chain and macro-cycle indicators move slowly and are more reliable for identifying major cycle tops and bottoms. Use web_search to find the latest data.

W1: LTH-MVRV — Long-Term Holder Market Value to Realized Value (Weight: 12 points)

What it is: MVRV calculated specifically for Long-Term Holders (coins held >155 days). It compares the current market value of LTH coins to their realized value (cost basis). When LTH-MVRV is low, even diamond hands are underwater — a powerful bottom signal. When very high, LTH are sitting on massive unrealized gains and likely to distribute.

Search keywords: Bitcoin LTH MVRV ratio or BTC long term holder MVRV glassnode

Scoring:

• LTH-MVRV ≤ 0.5 → Sub-score 0 (LTH deeply underwater, extreme bottom)
• LTH-MVRV ~1.0 → Sub-score 20 (LTH at breakeven)
• LTH-MVRV ≥ 3.5 → Sub-score 100 (LTH in massive profit, distribution likely)
• Linear interpolation between anchors

Interpretation: This is one of the highest-weight indicators because LTH behavior has historically been the most reliable cycle marker. LTH-MVRV < 1.0 has only occurred at major cycle bottoms.

W2: NUPL — Net Unrealized Profit/Loss (Weight: 11 points)

What it is: Measures the overall unrealized profit or loss of all Bitcoin holders as a percentage. NUPL = (Market Cap - Realized Cap) / Market Cap. Negative = the network as a whole is at a loss. Above 0.75 = euphoria.

Search keywords: Bitcoin NUPL or BTC net unrealized profit loss

Scoring:

• NUPL ≤ -0.20 → Sub-score 0 (Capitulation — network-wide losses)
• NUPL ~0.25 → Sub-score 50 (Neutral — moderate unrealized profit)
• NUPL ≥ 0.75 → Sub-score 100 (Euphoria — massive unrealized gains, likely top)
• Linear interpolation between anchors

Historical phases: NUPL < 0 = "Capitulation" (buy zone), 0-0.25 = "Hope/Fear", 0.25-0.50 = "Optimism", 0.50-0.75 = "Belief/Greed", > 0.75 = "Euphoria" (sell zone).

W3: LTH-SOPR — Long-Term Holder Spent Output Profit Ratio (Weight: 9 points)

What it is: When long-term holders move/sell their coins, LTH-SOPR measures whether they're selling at a profit (>1.0) or a loss (<1.0). It's calculated as the value at spending time ÷ value at creation time for outputs held >155 days.

Search keywords: Bitcoin LTH SOPR or BTC long term holder SOPR

Scoring:

• LTH-SOPR ≤ 0.5 → Sub-score 0 (LTH selling at massive losses — capitulation)
• LTH-SOPR ~1.0 → Sub-score 25 (LTH selling at breakeven)
• LTH-SOPR ≥ 5.0 → Sub-score 100 (LTH realizing 5x+ profits — distribution)

Interpretation: LTH selling at a loss is extremely rare and signals deep cycle bottoms. LTH selling at large multiples of profit indicates mature bull market distribution.

W4: STH-SOPR — Short-Term Holder Spent Output Profit Ratio (Weight: 8 points)

What it is: Same concept as LTH-SOPR but for Short-Term Holders (coins held <155 d